Cattle Call is an original production of the Nebraska Rural Radio Association and is presented by Blue Chip Herefords in Oxford, Nebraska.
Quick Read
- More cattle coming? Tyson’s reported plans for a second shift at its Amarillo, Texas, plant could signal expectations for increased cattle supplies by June.
- Price discovery concerns: Brad Kooima says the additional shift may rely almost entirely on formula-priced cattle rather than negotiated cash purchases.
- What it means for producers: More processing capacity doesn’t necessarily mean more competition for cattle or stronger bargaining power for feedlots.
Tyson Foods’ reported plans to add a second shift at its Amarillo, Texas, beef processing plant could offer an early indication of increased cattle supplies next year. But market analyst Brad Kooima questions whether the expansion will improve competition for cattle in the cash market.
Speaking on Cattle Call, Kooima of KKV Trading in Sioux Center, Iowa, said the anticipated June startup could reveal what Tyson expects from cattle availability, potentially including additional Mexican feeder cattle entering the U.S. supply chain.
“This was their big announcement they were going to have… So why would they have a second shift if they didn’t think there was a whole lot more cattle by June, right?”
However, Kooima said he understands the additional shift could be supplied almost entirely through formula-pricing agreements rather than negotiated cash purchases.
“Now, I also understand that this is going to be almost exclusively a formula deal where the second shift is going to be all formula cattle. It’s not going to do anything for price discovery, if that’s the case. We need more negotiation, not less.”
Formula agreements often use negotiated cash prices as benchmarks. When fewer cattle are sold through direct negotiation, a smaller pool of transactions helps determine prices for a much larger share of the industry.
Kooima pointed to recurring confidentiality restrictions in Texas cattle price reporting, where insufficient negotiated trade has sometimes prevented USDA from publishing regional prices. That has increased reliance on broader benchmarks, including the five-area weighted average.
Meanwhile, cattle supplies remain uneven across the country. Kooima said northern feedlots have more market-ready cattle, while southern supplies remain tight following the prolonged interruption of Mexican feeder cattle imports. The imbalance has even prompted cattle shipments from Iowa and Nebraska to southern packing plants.
While additional slaughter capacity could help absorb cattle supplies, Kooima cautioned that it may do little to strengthen producers’ negotiating position.
“I don’t think it changes a thing other than maybe it gives you a little bit of a tip off of what at least that packer thinks is going to be available for supply, if he thinks there’s going to be enough cattle around to go ahead and fill up that second shed.”
Other topics discussed on this week’s Cattle Call:
- Why cattle from Nebraska and Iowa are being shipped south for slaughter.
- How heavier cattle and slower marketings are shifting packer leverage.
- Why traditional seasonal cattle market patterns may be changing.
- How later calving dates and heavier finished weights are shifting seasonal cattle supplies.
- Signs of heifer retention and what herd rebuilding could mean for future supplies.
- Holiday beef demand and the outlook for higher-quality cuts.